The high-street retailer has suffered as the market for CDs, DVDs and books has migrated online

Hedge funds are betting that heavy snow and fierce competition will result in
a dismal Christmas for HMV, the embattled entertainment retailer.

Nearly a quarter of HMV’s stock — 23.4% — was on loan to traders last week,
according to Data Explorers. Hedge funds borrow shares from other investors
so they can sell them short, hoping to profit when they fall. HMV has
suffered as the market for CDs, DVDs and books has migrated online. New
business lines such as clothing and concerts have not filled the gap left by
music piracy and digital music sales.

Simon Fox, chief executive, halved the dividend this month after dire
interims. HMV revealed a £41.3m pre-tax loss after a 6% slide in sales.
Since then, traders have raised their short positions by two percentage
points to 23.4%, a three-month high. Its shares have fallen by nearly a
third this month to 31p.